Sources close to Microsoft have detailed to TNW a difficult, and perhaps unresolvable situation between the two companies that underscores the difficulty with certain Apple rules concerning its app marketplace, and how far the company is willing to go to protect its vaunted 30% cut of in-app revenues.
The difficulty began when Microsoft rolled out the ability for SkyDrive users to purchase more storage space on the service. From that point, the company was not permitted to update its application in the iOS App Store.
The reason? It doesn’t pay Apple a 30% cut of subscription revenue generated by the application through the paid, additional storage. Microsoft, TNW has learned, has a new version of the application ready to go, including a key bug fix that would rectify a crashing bug, but cannot get it through.
Microsoft does not appear keen to pay Apple the 30% cut, as it lasts in perpetuity, regardless of whether a user continues to use an iOS device or not, as the billing is through their Apple account.
Therefore, if a user signed up for a few additional gigabytes on their iOS device, and then moved to Android or Windows Phone or not phone at all, for the length of their account, Apple would collect 30% of their fee for storage. This hasn’t sat well with Microsoft.
Microsoft has persisted in trying to work out a compromise with Apple, but has thus far failed to come to an agreement. The company offered to remove all subscription options from its application, leaving it a non-revenue generating experience on iOS. The offer was rebuffed.
If a service has a subscription option, it seems, and it is not listed in the iOS store, the application cannot, and will not be allowed. That is, unless you are small enough that Apple doesn’t bothers to check. I assume that smaller companies could slip under the radar.